Simply saying “universities must operate more like businesses” ignores the fundamental differences in design between private and public organizations. Meeting the challenges facing public higher education requires a collaborative systems approach.

Over the past twenty years, institutions of higher learning have been increasingly hard-pressed to meet the distinct demands imposed by a number of different stakeholders. Public colleges and universities, in particular, have been under constant monitoring and intensive scrutiny by accrediting bodies who have imposed strict standards of accountability in teaching and learning. At the same time, they have been forced to work within very tight budgetary constraints consistent with the demands of politicians and policymakers who have simultaneously mandated that they increase enrollments while holding down student tuition and fees. Meanwhile, employers demand that instructors and administrators emphasize the professional skills, training and applied knowledge that are directly relevant and applicable to functions and tasks required in the information era.

Overall, the success of higher education institutions in meeting these discrete demands had been mixed at best. While higher education institutions, especially large ones, have been relatively successful in satisfying the demands of accreditation authorities, they have simultaneously been unsuccessful in meeting many of the expectations of the marketplace in emphasizing the right skill sets or the demands of politicians to manage their costs. This imbalance reflects the fragmented nature of higher education systems.

The latest initiative by politicians to improve four-year graduation rates provides a vivid example. The California State University (CSU) system is being compelled to increase its six-year graduation rate for full-time freshmen from 57 percent to 70 percent while at the same, closing its ethnic/racial achievement gaps by 2025. It must accomplish these goals without increasing the portion of full-time equivalent students (FTES) or increasing funding. If the CSU increases the number of students who remain and graduate without raising the ceiling on overall FTES enrollments, then it will have to admit fewer new incoming students.

Addressing such complexities will require a paradigm shift in thinking about how organizations function and operate.

Why “Business As Usual” Approaches Are Not Sufficient

Many argue that the solution to all of this is to run public universities more like private business. The claim that the private sector is more accountable, spendthrift and efficient is now commonplace. Universities and other public sector agencies, the popular narrative goes, must become more flexible and agile and untether themselves from the rigidities of government-like bureaucratic processes so that they can become more financially astute and customer-oriented.

Since the 1980s, government agencies in general, and public universities more particularly, have been striving (with the best of intentions) to adopt businesslike accountability practices and efficiency standards in line with a public-private cooperative paradigm known as the New Public Management (NPM). These efforts are easily recognizable through the ubiquitous use of performance reviews, management by objective techniques, strategic plans, risk analysis and benchmarking. Indeed such applications have become especially pronounced since the 1990s under Clinton and Gore’s program to promote private-sector strategies and performance measures through a public administrative campaign that became known as “Reinventing Government.” Despite this, large numbers of politicians and citizens alike believe that universities continue to fall far short in meeting these multiple obligations. It is ironic to note that as universities and other public agencies have been striving to incorporate business-like paradigms, such as the NPM and other related nostrums into their ranks over the last forty years, politicians and citizens alike continue to grow evermore disenchanted with them.

Candidly speaking, this does not surprise us. The truth is that simply running public agencies more like a business will not work. Here is why:

The root of the problem rests at the systemic level and not the sectoral level (as is often portrayed). In actuality, the demands placed upon contemporary public universities discussed above are connected—and in very particular ways. Tuition, fees, public budgets and the resources available to promote quality consistent with employer demands, for example, are linked. Tinkering with one affects the other, whether directly or indirectly. Therefore, any attempt to improve the overall educational mission must involve the joint cooperation of the stakeholders in reconciling these discrete aims and objectives into a coherent and overarching strategy.

This is easier said than done as public sector organizational systems—public universities included—are characteristically fragmented and siloed. Part of this is by design and rooted in the rationale of separating administrative powers and authority among various institutions and jurisdictions. This goes all the way back to the founding of the republic. The logic of breaking down tasks and responsibilities into discrete units is rooted in the “scientific management” paradigm that was adopted in the late 19th Century in an effort to “rationalize” administrative processes. These antiquated administrative paradigms remain embedded in the fabric of public higher educational systems to this day. Academic departments, for example, largely operate in isolation from one another. Consequently, faculty and administrative responsibilities and objectives are often regarded as discrete rather than supportive.

Systems Thinking Focuses On “Minding the Gaps, Not the Parts”

The application of NPM-based efficiency measures has only made things worse. Why? This is because attempts to improve the efficiency of the parts within a broken and fragmented organizational structure only serves to reinforce the gaps in the mission, aims and functions between them. As Russ Ackoff and Sheldon Rovin argue, “the righter we do the wrong thing, the wronger we become.”[1]

If public higher education institutions are to be successful in meeting the various demands discussed above, the various parts must work together as a coherent system. A system is a set of elements that function as a whole to achieve a common purpose. Russell Ackoff defines a system as “a whole which is defined by its function in a larger system of which it’s a part.”[2] From a systems perspective, “[t]he obligation of any component is to contribute its best to the system, not to maximize its own production, profit, or sales, or any other competitive measure.”[3]

“A system must be managed. It will not manage itself.”[4] Effective management of system requires transformational leaders who are capable of looking beyond narrowspective, silo-centric mental models to broader system-focused ones.[5]

Educational leaders must develop a “working knowledge of the interrelationships between all of the components [and sub-processes] within the system and everybody that works in it.”[6] This means that they must learn how to navigate the “many internal and external interrelated connections and interactions, as opposed to discrete and independent departments or processes governed by various chains of command.”[7]

Returning to the CSU example discussed above, it will be essential that state politicians, policy makers, and educational leaders work closely and collaboratively with CSU leaders in tandem with the administration and faculty and students at the individual campuses to devise an overarching strategy for addressing the multiple demands placed upon public universities in the contemporary era.

This is essential given that each campus within the CSU system serves very different demographic populations and hence possesses unique challenges. Recognizing this fact is a major step in the right direction. Developing strategies for doing this and successfully implementing them, however, requires much deeper set of discussions that we will visit in our further editorials on the subject.